Have Australians been manipulated over the purchase of new fighter jets?

New fighter jets set to be bought by Australia for some $24 billion have excited manufacturers who hope to be part of their creation, but critics suggest manufacturers, taxpayers and politicians have been manipulated by an elaborate and misleading sales job by the world's largest military corporation.

Transcript

CHRIS UHLMANN, PRESENTER: The futuristic F-35 Stealth fighter bomber is marketed on the promise of being the most lethal predator in the sky. It'll want to be because despite deep budget cuts elsewhere, the Abbott Government is sinking $24 billion into buying 72 of the war planes.

It's Australia's largest ever military acquisition and local manufacturers are thrilled by the promise of a slice of the action, building key components for the jets.

But others warn that politicians have been manipulated by an elaborate and at times misleading sales pitch by the world's largest military corporation, Lockheed Martin.

Greg Hoy reports.

GREG HOY, REPORTER: This is the controversial F-35 Joint Strike Fighter being put to the test in skies over Florida. Their cost is sky-high. Australia has allocated $24 billion to buy and deploy a fleet of 72 of them.

That equates to roughly $190 million per aircraft.

DAVID JOHNSTON, DEFENCE MINISTER: What we are getting is a beyond-visual-range radar and targeting capacity. It has a staring array that gives magnificent situational awareness to the pilot. It has an electronic suite that is not, I think, comparable to anything of any potential adversary in our region and beyond.

GREG HOY: The F-35 was supposed to be in service by 2010, but the project remains way behind schedule and way over budget. It's long overdue international debut was aborted last month due to an engine fire during take-off in Florida.

Regardless, soon after, an elaborate celebration was staged in Texas to unveil the first of Australia's 72 F-35s, the largest foreign order to date for the US aircraft.

PRESENTER: The most advanced fighter ever developed.

GREG HOY: It was a dazzling sales presentation by F-35's creator, Lockheed Martin, the world's largest military corporation.

The potential for local manufacturers to win lucrative F-35 contracts has been central to Lockheed Martin's hard sell to the Australian Government.

TONY ABBOTT, PRIME MINISTER (April 23): Australian business has already won some $1.5 billion worth of work associated with this aircraft. Up to $7.5 billion worth of additional work is there potentially.

GREG HOY: In fact, so far, Australian industries are only contracted for around $370 million work, with Lockheed Martin assurances but no guarantees of more to come.

DAVID ELLUL, MD, MARAND MELBOURNE: They're unable to actually go to long-term contracts until they move from low-rate production.

GREG HOY: So how long are the contracts?

DAVID ELLUL: So currently the contract are for, like, 12 months - annual.

GREG HOY: Melbourne manufacturer Marand is busy making key components for the new fighter jet that are so highly classified, we can't show them.

DAVID ELLUL: We're supplying 722 vertical tails over the next 20 years.

GREG HOY: Marand's David Ellul has invested 10 years of his company's profits to supply the F-35 project, hoping once it ramps up to full production it will be a bonanza for his family business.

DAVID ELLUL: They're forecasting 300 aircraft per annum where currently they're only doing 32. They use that opportunity to make sure they've ironed out all the bugs.

GREG HOY: However, Federal Liberal MP and former analyst with the Defence Science and Technology Organisation, Dr Dennis Jenson, says Australian manufacturers should be very wary of Lockheed Martin's assurances.

DENNIS JENSON, WA LIBERAL MP: The warning I'd give is: don't bank on the work that you're being told you're going to get. You will get it while Lockheed Martin is still pushing very hard for signatures on the dotted line, but once all those signatures are there, don't bet on winning any future contracts.

GREG HOY: Dr Jenson and others are angry with Lockheed Martin's repeated assurances to Australia about the value and performance capability of the expensive aircraft.

PETER GOON, AIR POWER AUSTRALIA: The aircraft is not coming within a bull's roar of its - some of its operational specifications. The designs are riddled with single points of failure. And many of the critical elements of design have been painted into what we engineers call "coffin corner".

GREG HOY: What the former RAAF head flight test engineer, Peter Goon, means by "coffin corner" is the concern that the F-35 couldn't compete against these cheaper, lighter and more agile Russian and Chinese stealth fighter jets, which are expected to be sold widely around the world.

PETER GOON: Those aircraft are designed as lethal killing machines. The F-35 JSF will not survive against those aircraft.

DENNIS JENSON: Data shows that the thing does not perform as well as a whole lot of other fighters aerodynamically. There are very real problems with the way that Lockheed Martin is trying to sell this aircraft.

GREG HOY: Dr Jenson raised questions about problems posed by the F-35's heavy weight and the threat that it will be no match for possible adversaries with a high-ranking Lockheed Martin delegation before a joint parliamentary inquiry in Canberra. Lockheed Martin's response: "We cannot answer that question, just as we cannot answer the threat question, because we get into classified areas very, very quickly."

DENNIS JENSON: I find it very convenient for them saying, "Oh, that's classified," because quite frankly, you're starting to talk about areas where the JSF becomes very, very vulnerable.

GREG HOY: Lockheed Martin would not be interviewed to discuss such concerns. The US Air Force Combat Command, meantime, has expressed its own reservations. It has warned the US must continue to maintain its older, more agile and far more effective fleet of F-22 jet fighters to back up the F-35s or they'll be rendered irrelevant. So should Australia instead try to buy the proven F-22? Well, according to the Defence Minister, Australia did ask, but the Americans insisted there was no choice, but to take the troubled F-35 or nothing.

DAVID JOHNSTON: They've said, "No, you can't have the F-22; that is for the United States Air Force. But you can certainly participate in our program with the Joint Strike Fighter." We do not have anywhere else to go - that's on one side of the coin. On the other side of the coin, this aircraft is coming along, with all due consideration to it, very, very well.

GREG HOY: The critics say there are other options that should still be considered, such as the Boeing F-15 Silent Eagle, the SAAB Gripen E, the French Rafael or the F-22. And for all the F-35 fanfare, so far, Australia has only actually ordered two F-35s and won't order more until 2016.

So this dog fight will only intensify to decide the fate of Australia's $24 billion fighter jet investment and the financial future of the local manufacturers whose hopes are riding on it.

DAVID ELLUL: It's the largest Defence program in history. It is a program that may be going slow at the moment, but we have full confidence that the program will go.

GREG HOY: Some worry as to whether they will ever go into full production with the F-35. Does that possibility worry you?